Richard Zakarian ordered to pay clients $1.4 million

ELYRIA -- Lorain tax consultant Richard Zakarian was ordered by Lorain County Magistrate James Blaszak to repay $1.4 million to Spitzer Management and about a dozen other clients who have accused him of stealing from them.

Spitzer Management Inc., of Elyria, has claimed that Zakarian's Benjamin Franklin Tax Service, at 405 Broadway, Lorain, failed to file Spitzer's tax returns and has not accounted for more than $753,831. Spitzer Management said it hired Benjamin Franklin Tax Service in January 2011 to provide payroll tax services and sent the firm $753,832 from June 2011 to July 2012. Benjamin Tax Service "failed to make the deposits and failed to file tax returns according to notices from the Internal Revenue Services," an affidavit said.

Spitzer Management owes the IRS about $567,130 which the tax firm failed to deposit, according to the affidavit.

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Zakarian remains at Lorain County jail, and since his legal counsel had withdrawn from his case, there has been no response from Zakarian. Attorney Anthony Giardini, who is representing Spitzer and the other businesses, churches, schools and non profits, said that he has kept Zakarian up to date on court proceedings.

He told Blaszak during a hearing yesterday morning that he has received no answer from Zakarian. So far, Giardini said, seven affidavits have been sent by some of the victims with the amount of damages. The remaining five, he said, are slowly coming in. Blaszak said when all the documents and affidavits are in, they can make a final order with the real amount that each victim will be entitled to.

Blaszak granted the issue of liability in favor of Giardini's clients, but a final entry will have to be delayed in order to have everything set in place. Giardini told Blaszak during the hearing that he's not even sure if he and his clients will receive all the money back.

Giardini said after the hearing that he has only been able to locate about $45,000 of the $1.4 million Zakarian is accused of stealing from his clients.

During the hearing, Blaszak denied a motion to consolidate the Spitzer Management lawsuit with the Pooh County Day Nursery lawsuit. Mark Douglas, a defendant on the Pooh County lawsuit and an employee of Zakarian, wrote in a brief filed Monday that he opposes the consolidation citing that it would confuse the plaintiffs of the Spitzer lawsuit because they never listed him as a defendant.

While Douglas was listed as a defendant in the Pooh County lawsuit, Douglas wrote in his brief that he is not an owner or principal, but an employee who had no control over the funds.

"Pooh bases my liability on the barest evidentiary threads: my name appears on 2 sales documents," Douglas wrote in the brief.

Blaszak said he denied the motion because there are other defendants in the other higher cases, including Douglas, that aren't a part of the Spitzer lawsuit. According to court records, the case involving Pooh County remains pending against Douglas.

Douglas said he did not want to comment too much on the situation, but said that it is a relief that Blaszak denied the motion for consolidation. He said it is horrible what happened to everyone involved.